* Amid forecast of further decline
The Central Bank of Nigeria (CBN) has explained the reasons for the $1.4 billion drop in the country’s external reserves during the first quarter (Q1) of 2023.
CBN attributed the drop to a reduction in crude oil output by the country.
According to CBN data from figures released, Nigeria’s reserves closed February 27, 2023 at $36.67billion, just as the funds, which stood at $36.99billion at the end of January, 1, 2023, fell to $35.53billion by the end of March, 30, 2023
Yet the reserve is also projected to drop further following a decision by the Organisation of Petroleum Exporting Countries (OPEC+) to voluntarily cut crude oil output by about 1.5 million barrels per day.
At the last CBN’s Monetary Policy Committee (MPC) in Abuja in March, the CBN governor, Godwin Emefiele, attributed the decline to the drop in crude oil price.
“The committee, however, noted the marginal decline in the level of gross external reserves to $36.13bn in February 2023, from $36.4bn in January 2023, a decrease of 0.7 per cent, reflecting the downtrend in crude oil prices, as global uncertainties persist,” he said.
According to the CBN data, Nigeria’s external reserves fell by $3.43bn in 2022, from $40.52bn as of the end of December 31, 2021, to $37.09bn as of the end of December 29, 2022.
Meanwhile, member nations of the Organisation of Petroleum Exporting Countries (OPEC), including Nigeria, have announced voluntary cuts to their oil production of about 1.15m barrels per day (mbpd) in a surprise move at supporting market stability.
The group of oil-producing nations had been largely expected to stick to its already agreed 2m bpd cuts when its ministerial panel, which includes Saudi Arabia and Russia, meets virtually on Monday.
Last October, Opec+, which comprises the Organisation of Petroleum Exporting Countries (Opec) and allied producers led by Russia, agreed output cuts of 2m bpd from November until the end of the year.
This is coming on the back of US argument that the world needs lower prices to support economic growth and prevent Vladimir Putin from earning more revenue to fund Russia’s invasion of Ukraine.
A number of OPEC-member countries have reacted to the development.
Saudi Arabia said it would cut output by 500,000 bpd while Iraq will reduce its production by 211,000 bpd, according to official statements.
On its part, the UAE said it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd while Oman announced a cut of 40,000 bpd and Algeria said it would cut its output by 48,000 bpd. Kazakhstan will also cut output by 78,000 bpd.
Russia, through its deputy prime minister, Alexander Novak, has said that Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023.
The CBN has embarked on a number of non-oil export promotion initiatives which were intensified in the second term of Emefiele’s tenure as CBN governor which commenced in June 2019.